Considering a move to a different state? It’s essential to examine its tax structure, as individual income, property, and sales/excise taxes differ widely across states, leading to significant variations in total tax burdens.
To identify the states with the highest tax burdens, a recent report from WalletHub analyzes each state’s taxation across these three categories as a percentage of total personal income. Here are the top ten states with the highest total tax burdens.
New York
Total tax burden: 12.75%
New York’s high taxation rates might be prompting some residents to seek greener pastures elsewhere. CNBC reports that “Several high-tax states have lost residents during the pandemic,” with New York ranking among the top five states and districts experiencing population declines.
Yet, there may be some relief on the horizon. The Buffalo News notes that the state legislature has approved Governor Kathy Hochul’s proposal to expedite scheduled income tax reductions for middle-class taxpayers. This move promises relief for millions of residents in the near future.
Hawaii
Total tax burden: 12.70%
Despite Hawaii’s existing high tax burden, The Tax Foundation reports that it’s “the rare state largely considering tax hikes.” However, it’s important to highlight that these proposed increases are not aimed at low- and middle-income taxpayers.
Living in paradise might become more expensive for high earners. Hawaii is contemplating implementing a new corporate income tax rate of 9.6% and introducing a new top individual income tax rate for those earning over $500,000.
Maine
Total tax burden: 11.42%
Maine, known as The Pine Tree State, also grapples with one of the highest tax burdens nationwide. However, there’s a silver lining: Maine is rolling out inflation relief tax rebates amounting to $850 for eligible individuals and $1,700 for eligible joint filers.
Maine.gov outlines the eligibility criteria, indicating that individuals must have a federal adjusted gross income of less than $100,000, while couples should have a combined income of less than $200,000. It’s estimated that around 858,000 Maine residents will benefit from these payments.
Vermont
Total tax burden: 11.13%
Maine isn’t the sole New England state to land on the list. In fact, several states in the region carry hefty tax burdens. Vermont, for instance, stands out with its notably high taxes, partly due to its distinctive property tax system.
SmartAsset highlights Vermont as one of the rare states where the state government imposes a property tax alongside those collected by local governments. It’s worth noting that property taxes play a crucial role in funding education initiatives.
Minnesota
Total tax burden: 10.20%
Moving to the Midwest, Minnesota emerges as another state grappling with a substantial tax burden, which has stirred heated debates in recent times. As reported by The Minnesota Reformer, discussions revolve around the possibility of issuing tax rebate checks.
With a hefty $7 billion budget surplus, Democrats propose providing $1,000 rebates to individuals earning below $165,000 and $2,000 to couples with incomes below $275,000. On the other hand, Republicans advocate for exploring tax reduction measures instead.
New Jersey
Total tax burden: 10.11%
If you’re thinking of fleeing New York’s hefty tax burden for New Jersey, you might want to think twice. The Garden State is no stranger to high taxes either. As reported by NJ.com, residents there are expected to shell out an average of $931,698 in taxes over their lifetimes.
New Jersey holds the dubious distinction of having the highest property taxes in the nation, with an average property tax bill exceeding $9,000. However, there’s a glimmer of hope on the horizon. Patch reports that new property tax rebates are set to benefit both homeowners and renters.
Connecticut
Total tax burden: 10.06%
As noted earlier, New England is known for its high taxes, and Connecticut is no exception. In fact, it ranks seventh in the nation for overall tax burden, according to WalletHub. Despite this, the state has implemented measures to provide some relief.
Connecticut recently hosted a sales tax holiday on clothing and shoes in April, as reported by WFSB. Additionally, CT Insider notes that the state has extended its gas tax holiday until December. These steps aim to offer some respite during a period of inflation.
Rhode Island
Total tax burden: 9.91%
With the exception of Massachusetts and New Hampshire, every other state in New England ranks among the top 10 states with the highest overall tax burden. This includes Rhode Island. However, there is some tax relief in sight.
Although a gas tax holiday was turned down, according to WJAR, the state is abolishing the motor vehicle excise tax. Additionally, The Newport Daily News reports that a child tax rebate of “$250 per child for a maximum of three children” is forthcoming.
California
Total tax burden: 9.72%
Similar to New York, California, as reported by CNBC, is another high-tax state experiencing a loss of residents. However, forthcoming inflation relief tax rebates may offer some assistance. VERIFY indicates that the state will issue rebates of up to $1,050 to eligible residents this fall.
The amount individuals receive is contingent upon their income and the number of dependents claimed on their income tax return, according to the source. It’s estimated that approximately 500,000 tax filers will not be eligible for these rebates.
Illinois
Total tax burden: 9.70%
Completing the top 10 states with the highest overall tax burden is Illinois. However, Illinois.gov highlights forthcoming tax relief measures. For instance, the state has suspended the tax on groceries for one year.
Moreover, the source indicates that the state has incorporated additional measures into its forthcoming budget, such as a property tax rebate of up to $300 per household and an income tax rebate of $50 per individual and $100 per dependent (for up to three children) for eligible taxpayers.